CADCR Construction News staff writer
Canada’s construction industry is headed for a significant slowdown in 2025, with overall growth forecast to be nearly cut in half as a cooling residential market and sluggish commercial investment are offset by a surge in public infrastructure projects, a new report says.
Total construction spending is projected to grow by just 2.2 per cent in 2025, a marked drop from the 4.2 per cent growth seen in 2024, according to the third-quarter “2025 North American Engineering and Construction Outlook” from Raleigh, NC-based consulting firm FMI.
“This softening is really due to slowing commercial and residential investment, while non-building and infrastructure spending is expected to remain quite strong,” said Brian Strawberry, chief economist at FMI, in a video accompanying the report.
The report describes the Canadian economy and construction sector as being in a “time of tumult,” pointing to external pressures from its largest trading partner.
“This is largely attributed to the uncertainty in Canada’s relationship with the United States,” Strawberry said. “As a very close trading partner, Canada’s economy is highly sensitive to US tariff policy and the broader US economy.”
The forecast, which anticipates a slow 2025 with a potential rebound in 2026, shows a clear divide between public and private sector activity.
Infrastructure is the primary driver of growth, with spending on power, transportation, highways and streets, and water and sewage systems all expected to increase by more than five per cent. Health care and public safety construction are also pegged for strong growth.
In contrast, several private-sector segments are expected to contract, including single-family housing, lodging, commercial, and religious building construction.
Other major categories are forecast to remain stable with modest growth between zero and four per cent, including the multifamily housing, office, manufacturing, and educational sectors.
Strawberry said these dynamics are likely to persist in the near term.
“Looking forward, we expect many of these same trends to hold,” he said. “We expect infrastructure to continue to lead growth, while we expect residential and many of our private non-residential building segments to remain under pressure, really through the end of this year and into early 2026.”
